Cannot RDP to XP Desktop

I am having problems with one computer on the domain. I can't RDP to it.
When I try to connect I get an error message saying "This Computer can't connect to the remote computer". "Try connecting again. If the problem continues contact the owner of the remote computer or your network administrator" I get this message from any computer, inside or out that I am using.

The computer is XPP SP3. There is no 3rd party firewall on the computer. The computer is on a SBS2008 domain. I have verified that Port 3389 is open and I can connect to the computer using VNC. I have read that screen resolution can hamper this, I have modified the resolution to 1024x768 without getting any access. I found a hot fix for SP2 but when I tried to apply it I was advised that the fix was already applied.

1, go to system under control panel, under remote tab, "Allow users to conttect remotely to this computer" should be selected, also click the select remote users button, proper users should in the list.

hmm I've had cases where Remote Desktop is listed in the firewall rules but I can't access the PC without turning off the firewall. I wonder if there is a way to bypass the GP so the Local Admin can change the firewall settings...

I tried reinstalling the client and now I get different messages but still no connection. The Message Title is "VBScript Remote Desktop Disconnected" The message body says "The computer you are trying to connect to cannot be contacted. Verify that it is turned on awake ..."
I ran the MS Port Scanner and port 3389 is not listed. When I tried to add it as a firewall exception it wouldn't allow me to because it already exists.
I am thinking that I need to remove this machine from the domain, fix up the firewall they rejoin it back to the domain. Is there a better way to handle this? Is this considered an extreme action?
What would you suggest?

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